The tech heavy index rebounded on Friday from losses earlier in the day, with investors in recent sessions spooked by rising interest rates that offset optimism about an economic rebound.

The Nasdaq was up about 0.5% Friday afternoon at 12,784. A close below 12,686 points would confirm the Nasdaq has been in a correction since closing at 14,095.47, its highest ever, on Feb. 12.

Graphic: Nasdaq tumbles 10% from February record high - https://graphics.reuters.com/USA-STOCKS/NASDAQ/yxmvjxmanvr/chart.png

Since Feb. 12, Elon Musk's Tesla, whose soaring stock has been Wall Street's most traded over the past year, has tumbled 24%. It is now down 20% in 2021, but remains up almost 50% over the past six months.

Rival electric car company NIO has dropped 34%, while mature technology-related companies including Apple, Microsoft, Amazon and Facebook, have seen much smaller declines.

Graphic: Wall Street's biggest trades mostly tumble Wall Street's biggest trades mostly tumble - https://graphics.reuters.com/USA-STOCKS/ARK/gjnpwzmkbvw/chart.png

Rising interest rates disproportionately hurt high-growth tech companies because investors value them based on earnings expected years into the future, and high interest rates hurt the value of future earnings more than the value of earnings made in the short term.

Graphic: ARK Innovation's holdings hammered in Nasdaq drop - https://graphics.reuters.com/USA-STOCKS/ARK/nmopazgxdva/chart.png

The $20 billion ARK Innovation ETF, run by top stock picker Cathie Wood and beloved by many retail investors, has been slammed in the Nasdaq sell-off. Focused on "disruptive innovation", the fund owns some of Wall Street's most volatile stocks and on Friday fell 6%, putting its loss since Feb. 12 at almost 30%.

Investors have also accelerated a months-long rotation into industrials, materials and other cyclical sectors viewed as likely to outperform as the economy recovers from the coronavirus pandemic, and away from companies, such as Peloton Interactive and Netflix, that benefited from people staying home during the pandemic.

Graphic: S&P 500 value pulls ahead of growth -

The S&P 500 growth index, which includes many of coronavirus winners, has fallen 4% in 2021, while the S&P 500 value index has gained 5%.

(Reporting by Noel Randewich; Editing by Alden Bentley and Alex Richardson)

By Noel Randewich